(This is a guest post from Jack Reed. Since I know very little about bankruptcy, I asked Jack to point out some common misconceptions about the process.)

The very thought of going bankrupt gives sleepless nights to consumers facing overwhelming debt problems.  The prime reason behind it is nothing but the social stigma associated with bankruptcy.

Like most big and frightening things, bankruptcy has a reputation that is glossed with a lot of myths and misconceptions. The myths have been embellished to such an extent that they have instilled in consumers a deep rooted fear of being a financial castaway.

The following are some common bankruptcy myths that greatly affect a debtor’s decision of bankruptcy filing:

1. Bankruptcy will lead to social disgrace

It is the most common misconception about bankruptcy. It is true that bankruptcy is a public legal proceeding but it also true that there are huge numbers of bankruptcy filings everyday and no one takes the pain to follow all of them diligently.

Unless you are a socially prominent person drawing a lot of media attention, the only people interested in your bankruptcy filing will be your creditors and no one else.

2. Personal bankruptcy is meant for the poor only

Another common stigma associated with bankruptcy says that personal bankruptcy is only for the poor. But the real picture is quite different.

The terrible economic downturn in the recent years has pushed numerous formerly affluent people into bankruptcy. Bankruptcy is no more a social stigma but a financial catastrophe that can hit any of us.

3. Bankruptcy will eliminate all your obligations

It is common wrong notion with which consumers file for bankruptcy. Bankruptcy will not waive off all your debts. You will still be liable for obligation such as child support and alimony, federal student loans and most taxes owed to the federal government.

4. You will lose all your assets

This is an important misconception that makes the debtors dread bankruptcy. Most of the consumers think that the state will liquidate everything they have and they will be financial impoverished forever. But, in reality the federal as well as the state governments have wide range of exemptions to protect the certain kind of assets from liquidation.

Moreover only Chapter 7 bankruptcy is liquidation bankruptcy. If you file for bankruptcy under Chapter 13, you will not have to go through liquidation proceedings.

5. Your credit worthiness will be ruined forever

It is true that bankruptcy stays on your credit report for 7 to 10 years depending upon the bankruptcy you file for. But it certainly does not mean that your credit worthiness will go for a toss forever.

Bankruptcy, in fact, paves way for you to build your finances afresh. All you need to do is take wise financial decisions post-bankruptcy and rebuild your credit worthiness.

6. Both the spouses need to file for bankruptcy

It is not necessary. Both the spouses will be required to file for bankruptcy together only if they owe the debts jointly.

7. You will have to repay your debts even after bankruptcy

This is a common misconception that creditors want you to harbor so that you feel obligated to repay your debts even after the bankruptcy procedure is over. However, in reality, you are neither legally nor morally liable for the debts that are discharged through bankruptcy.

8. Filing for bankruptcy is difficult

It is another myth that dissuades debtors from filing bankruptcy. But bankruptcy filing is not as difficult as it seems. You can even file for bankruptcy without a lawyer’s help. All you need to do is fill out the forms correctly and submit all the required documents properly.

However, it is always advised that you seek help from a lawyer while filing for bankruptcy.

9. You may exclude some creditors from your petition

This is another commonly mistaken idea. Bankruptcy will require you to include all your creditors in the petition.

10. You can’t file for bankruptcy more than once

It is completely untrue. After a successfully completing a bankruptcy case, you cannot file for bankruptcy within the next 8 years. For Chapter 13 bankruptcy you can file more often that, but you cannot undergo more than one bankruptcy case at a time.

Nevertheless, having multiple bankruptcies on your credit report is never a good idea and can harm your credit worthiness.

There is indeed nothing very pleasant about bankruptcy. But, it is definitely not as dreadful as you imagined it to be. So, if you are struggling with overwhelming debts that cannot be managed with any other debt relief option, then you can safely file for bankruptcy.

It is the most logical and favorable debt relief option that can get you out of your insurmountable obligations and help you shape you finances afresh.

My first encounter with someone trying to time the stock market occurred when I was nine years old, at church, of all places. I was sitting in the foyer, waiting for my parents to finish socializing so that I could go home and jump on the trampoline.

While waiting as patiently as a nine-year-old could, I (naturally) eavesdropped on the conversation of two “old” guys standing next to me. (Old, when one is a child, is anyone over 30.) One guy was complaining to the other about his recent losses:

…so it climbs to $3.63 per share, and I think, “This is definitely the top!” So I sell all my shares.

By the end of the day, it closed at $3.96! If I’d only waited 4 more hours, I would have made $12,000 more…

The other guy just shrugged his shoulders and sighed, as if saying, “Well, that’s just how investing in the stock market goes…”

I shook my head in amazement that such fortunes could be made and lost so quickly. It seemed the Gods of the market were more fickle than my infant sister.

But I didn’t philosophize on the stock market for long, there was a 10-foot wide trampoline waiting at home for me.

Back to the Future

As I aged and thought more about that experience, I started to believe that stock market investing was nothing more than an elegant form of gambling. That the guys (and girls) who made money were the ones lucky enough to guess when to buy low and sell high. And the losers were the suckers on the other end.

But was I right?

Is investing in the stock market gambling?

The Answer

The answer, I would submit, is more nuanced than a simple yes or no. I believe that it is possible to invest in good businesses and it’s also possible to speculate (gamble) on stocks.

Let me show you the difference. There are two ways to determine whether you are gambling or investing: (1) time horizon and  (2) chosen instruments.

Let’s look at both.

You Gotta Know When to Hold ‘Em

The first distinction between gambling and investing has to do with how long you hold on to the stocks you buy–what the industry calls your “investment horizon”. The gambler (hare) will buy and sell stocks hourly, daily or weekly depending on the short-term rise or fall of the price of the stock.

The gambler cares not about the underlying company whose stock he buys and sells, only that the price goes up or down.

The investor (tortoise), on the other hand, is in it for the long haul. She chooses companies (or groups of companies) that she believes in and buys a part of that company for the future.

She is optimistic about the long-term outlook for the market/economy that she invests in and ignores the day-to-day fluctuations in prices.

In short, the gambler buys and sells stocks based on short-term performance. The investor buys part of a company based on its long-term prospects for growth.

Wrath of the Alphabet Soup

Another way to distinguish between stock investing and gambling is by the instruments one buys.

The gambler loves the latest and greatest newfangled type of exotic investment. MBSs, options, futures…the gambler (hare) loves to bet on stock prices.

Options are bets that the price of a stock will rise or fall to a certain price at a certain date. Futures are contracts to buy or sell an asset in the future at a price specified today. Betting on prices–a clear winner and loser.

MBSs (mortgage-backed securities) and its cousins form the alphabet soup of investment inventions too complicated for most people and even self-proclaimed financial experts to understand.

The investor takes a much simpler route: she buys stocks and stock (mutual) funds. Simple and easy to comprehend. She purchases a part of a company (or many companies) and her success rises or falls with the performance of that company and the overall market.

For the investor to win, there does not have to be a loser.

By now, you should know my investing philosophy. Be an investor (tortoise) not a gambler (hare). And pick up my free Minimalist Guide to Investing to learn how to start investing for your future.

Do you ever get a paycheck and ask yourself, “What should I do with this money?”

Probably not.

You probably know exactly which pair of shoes or which Justin Bieber song you want to buy.  Or maybe the latest gadget from that 3 a.m. infomercial.

I’m sure you have plenty of ideas how you want to spend money.

But what about how to save it?

Or who to give it away to?

In this post, I’ll fill you in on the three things you should be doing with your money.  The only three things.  Here they are: give it away, save it, and spend it.

That’s it. Not for toilet paper. Not for gambling. Not even for starting a fire. You should do all three of these things, and only these three things.  And in this order: give away, save, spend. Let’s look at each.

3) Give It Away

Whenever you receive money, you should first give some away.  Why? There are many reasons, here are a few:

• Giving money away helps keep us humble.  When we give our things to the less-fortunate, it reminds us of how blessed our lives are.
• Those who give money away are more wealthy. Arthur C. Brooks explains the research behind this claim in his book Gross National Happiness. Call it karma or whatever you wish, but what we give away comes back to us.
• Those who give to charity are happier. This is also explained in Gross National Happiness.

Giving some of our money to the less-fortunate is just the right thing to do.  But how much should you give?

This is for you to decide.  If you are married, discuss it with your spouse. If you are religious, pray a bit and seek direction.  Historically, a tithe has been 10% of one’s income.  After determining how much to give, now figure out who to give it to.

If you attend a church, there’s a good chance that they accept voluntary donations that go to help the needy.  That’s an easy place to start.  If you are not affiliated with a church, there are many noble non-profit organizations that could use your donations for much good. (Question: does anyone know a good site/service that evaluates the honesty of non-profit organizations?)

The first thing you must do with your money is give some away.  Your soul needs that experience.

2) Save It

After donating some of your money, you need to save some.  Your soul needed you to give some away, now your future needs you to invest.  I’ve written in several other places about saving, because no one is doing enough of it!

There are many things to be saving for:

• your wedding (hopefully only one)
• a new house
• your kids’ college tuition
• vacation in Italy
• retirement

Ideally, you’ll be saving for retirement throughout your whole life. The mid-range goals of a wedding or house hopefully come sequentially and not simultaneously, so that you can focus on one at a time.

So, how much should you save for all of these expensive life events? I’ve written an extensive post on retirement saving, so I’ll focus elsewhere today. Most financial gurus say you should save at least 15% of your take-home pay. I say more.

AT LEAST 15%. That’s the bare minimum. Save more and your future will love you for it. Save less and there will be much weeping, wailing and gnashing of teeth when the kids decide that a cheapo state school is just not posh enough for them.

Spend It

After donating and saving, this is the last thing to use your money for.  Your soul needs to give. Your future needs you to save. And your present self needs to live comfortably.

There are sooo many things to spend your money on. But which are the most important? How to prioritize?

1. Utilities, rent and food: You need to spend to survive.
2. Debts: You need to spend to fulfill your borrowing obligations.
3. Stuff: You need to spend to fill other physical and emotional needs.

The awesome thing about spending in this order, is that once you get to spending on stuff, you can do it WITHOUT ANY GUILT! You have fulfilled all of the necessities: improving the world by donating, saving for tomorrow, and spending to meet your needs. Once you’re here, you are free to spend as you wish.

Earned Income vs. Found Money

I wrote an earlier post about the problem with “found money”. Since you weren’t expecting it, you blow it on Snuggies for the whole family. We’re not bad at figuring out how much of our paychecks to donate, save and spend, but everything goes out the window when we get a check from Grandma for Christmas.

I think you should work out a plan for found money. Along with spending a good portion, you should save some and give some away. Just think about it.

So, that’s all there is to it. The three things you should do with your money: donate, save and spend, in that order.

As my wife says:

Pay God first, then yourself, then others.

Here at BSI, the goal is to give you big ideas in bite-sized portions. To break down complicated concepts into manageable chunks. And personal finance is definitely complicated.

Or is it?

The self-proclaimed “experts” in such areas as investing and retirement planning prefer to keep their subjects as murky and technical as possible, so that you need their help. Your continued dependence keeps the repo men away from your stockbroker’s Mercedes.

(Have you seen Operation Repo? It’s over the top!)

If you can cut through all the noise and self-promotion, the realm of personal finance can be boiled down to a few key principles:

• Get out of debt
• Save for a rainy day
• Invest for the future

In order to stay up-to-date on financial topics, I read a wide range of source material. Personal finance books are my favorite way to learn the foundations of money management, defeating debt and investing. I have recommended several here.

But the problem with books is that they can quickly become outdated. (Especially personal finance books, since legislators cry “Financial reform now!” seemingly every quarter.) To stay up-to-date on personal finance issues, I read several blogs.

And I must say, there are some very good financial writers out there. For your curiosity and enlightenment, listed below are my top five favorite personal finance bloggers. Included are links to their blogs so that you can share in the fun. Just be sure to continue reading here!

J.D. at GetRichSlowly.org

J.D. Roth could be called the granddaddy of personal finance bloggers. He started writing after getting deep into debt and reading lots of books on personal finance. He wanted a place to record what he’d learned and track his progress.

His blog has been around for so long now that he employs a few staff writers who cover subjects in addition to personal finance.

Trent at TheSimpleDollar.com

Trent Hamm began writing about personal finance after his self-described “financial armageddon”. His blog is a mix of general money advice mixed with personal experiences.

One of my favorite aspects of his writing is the personal, warm tone–he deals with his and others’ real, everyday situations.

Ramit at IWillTeachYouToBeRich.com

Ramit Sethi is my favorite Indian, and yes, I do know a few. His writing has a special way of connecting with 20-somethings. He gets us to stop reading and take action in our financial lives.

His book (of the same name as the blog) set me on the path to automated, simple money management. Ramit’s specialty is in showing how to leverage technology to improve finances.

??? at MintLife

I have no idea who writes here, probably several people. This is an awesome blog from the makers of a stellar money management service. They keep you up-to-date on the latest legislative changes that affect your money.

Read the blog and sign up for the free money management service.

David at MoneyNing.com

Another great entry in the personal finance genre, MoneyNing covers topics from money management to frugal living to investing. David writes in a personable style that let’s you know that yes, he’s a real person and yes, he cares about your financial well-being.

Now that you know the secret to my money knowledge, do something about it! Visit these blogs. Read their most popular posts.

Who knows, it may just improve your life!

(This is a guest post by Jack Reed of fileyourbankruptcy.org. He writes on various financial topics with a special focus on bankruptcy)

Are you so much in debt that now you have started considering it a part of your normal life? Do you realize that this type of thought process would push you further into the hole? It’s true, millions of Americans are today submerged in massive debts and declaring themselves bankrupt.

The sad part is that most of them have conditioned themselves to live happily with their debts. If you are one of them, then read on to know how you can avoid this escapism!

1) Build Your Budget

You have probably heard it a thousand times, but the importance of budget cannot be undermined. Prepare a budget and determine to stick to it. This will help you to spend within your means and avoid falling into debt.

If you are a spendthrift, then your budget would even help to inculcate a sense of financial discipline in you!

2) Limit Your Expenditure

Plan out in advance what you really need to buy. Without proper planning, one tends to indulge in a shopping spree especially with the credit card in wide use today. The point is, before buying anything, evaluate its usefulness to you.

Try not to be an impulsive buyer, take your time and decide if you really need to purchase something.

3) Avoid Using Credit Cards

Using credit card has become a style statement today, especially with the teens. The satisfaction of swiping your card and making big purchases is mentally satisfying. This leads most of us to the shackles of debt when the overwhelming monthly statement arrives at the end of the month.

If you are not wise with your money management, stop using your credit card right now!

4) Create An Emergency Fund

An extreme financial emergency can strike you from the blue. What do you do in such situations? Rely on your credit cards? This will just compound your problems. Build up an emergency fund to bail yourself out of such emergencies. Keep aside a part of your income each month to fill up your emergency fund.

5) Learn to Manage Your Debt

Instead of running away from your debt, chalk out a pro-active plan to fight it off. Move all your debts to the lowest possible interest paying account. Before you transfer your balance, check if the lower rate card has a reasonable introductory period so that you have enough time to clear your debts at the lower rate.

6) Educate Yourself

Utilize the free advice on the internet to manage your finances. There are millions of pages out there which promise to help you get wise with your money. Not all information is correct but it can help you make better decisions financially and keep you away from debts.

Don’t Do Drugs Debt

Debt is like a slippery slope, it will lead you to bankruptcy if you keep running away from it. Keep the above mentioned points in mind to enjoy a debt-free life. After all, you would not like to spend your life worrying about mounting debt figures. Isn’t it?

We young people (and middle-aged, and uh, mature people) have a financial problem.

We’re not saving enough for retirement. Not even close. The American savings rate is in the dismal single digits. How the heck is anyone going to live for 20-25 years on $250,000? I’ll tell you how:

by eating dog food and living in government housing

Back in the good ol’ days grandparents lived with their children and people worked pretty much until they dropped dead. Nowadays, we want independence, we want to retire early and, thanks to modern medicine, we’re living even longer. It’s not unfathomable that the average, healthy person currently in their mid-thirties could live 30+ years in retirement.

So why don’t we save enough for retirement? Why do we suck so much? Just kidding. You don’t suck, but here are a few reasons you aren’t saving enough for the golden years:

1) You’re Busy Buying Stuff Now

The latest generation iPhone is one sexy piece of consumer electronics. Why put $300 in a place you won’t touch for 40 years when you could be rockin’ the latest time-wasting app on your smartphone?

2) You Can Always Catch Up Later…

This goes along with the previous reason. You’re busy with mani-pedis. You know that once you hit 55, you can put an extra $5,500 per year in your 401(k). You’ll catch up then, you tell yourself.

Problem is, by then you’ve missed decades of visits from the magical leprechaun known as compounding interest.

Your pot at the end of the rainbow is full of Purina Dog Chow

and the leprechaun there to greet you is not the friendly one from Lucky Charms, but rather the killer from these movies that haunted my nightmares as a wee lad.

Whew, I just went to a difficult place…let’s get back on track.

3) You Forgot Inflation

A million dollars ain’t what it used to be. And in 30 years, how much do you think it will be worth then?

At an average of 4% per year, it’ll be worth $293,858. Ouch. You need to invest in assets that outpace inflation. Get out of CDs and into the stock market.

So…Where Do We Go From Here?

How much will you need to retire comfortably? I’ve heard many ways to estimate. I’ll give you one of the most common.

First, calculate 70% of your current annual income. Hopefully, by the time you retire, you’ll be out of all debt including the mortgage. Also, the kids should be on their own, lowering your expenses a bit more.

Next, divide that number by the withdrawal rate you’ll use in retirement. The “withdrawal rate” is the percent of your nest egg you’ll pull out each year to live on. Financial folks say 4-5% is a safe amount in order to use only interest and keep the principal intact.

The result of this calculation will give you a ballpark figure of how much you’ll need to retire comfortably. Let’s do an example. Say 70% of your annual income is $50,000. And we’ll use the more conservative withdrawal rate of 4%.

$50,000 / .04 = $1.25 million.

This means you should be able to spend $50,000 per year indefinitely.

Remember, there are so many variables in play (inflation rate, rate of return on your investments, actual expenses, etc.) that this is only an estimate.

Now, how much per year will you need to invest to reach this goal? Use this handy retirement calculator to figure it out. Enter 8-10% for the expected interest rate.

I know you don’t suck. I know that deep down, you really are concerned about saving for your retirement.

So get to it! Don’t let the normal reasons for underinvestment slow you down.

1. Figure out your retirement goal
2. Determine your monthly contribution
3. Read my free guide to learn where and how to invest for your golden years

Because that’s what we want your pot at the end of the rainbow to be full of:

Gold, not dog food.

And you won’t be stuck saying, “Where da gold at?“

Bite Size Idea is back! Sorry for the brief hiatus, but I had to take a break from the digital world.  There have been some major transitions around here, to which I devoted my energies.

The first was the transition from student life to working full-time.  I am now settled into my day job and loving it.

The second was moving from Utah (where we attended school) to Atlanta, GA.  We’re loving the city: there’s plenty to see, eat and do.

But enough about me.  The good news is that I’m back to writing.  My new pledge is at least one great post per week, with resumed activity on twitter and facebook.

When we last parted, Bite Size Idea was in the middle of Money Mistakes Week, discussing checking account mistakes.  Let’s resume where we left off and move on to savings account mistakes.

1) Not Having a Savings Account

This is a smack-yourself-in-the-face mistake.  You need to be saving money.  Americans are notorious for their low savings rates. How low, you ask? Try the 1-3% range! (Check out this Fortune article for more info.)

Thanks to the recession we are currently experiencing, that savings rate has increased a bit. There are some (myself included) of the cynical view that once the economy picks back up, our collective savings rate will go back down. I hope I’m wrong.

You need to think about your future. You need a savings account.

2) Not Saving for the Right Things

So you’ve decided that you need to save money for your future.  But where should you put it? What goes into the savings account and what goes into the retirement account?  In the next post, we’ll discuss where to put your retirement savings, but for now the short answer will suffice: Do not “invest” your retirement money into a savings account.

Because the rate of return on a savings account is so dismal compared to stock investments, a savings account is really no “investment” account at all.  Your savings account should be viewed as a place to store your emergency fund and money for short-term goals.

Be sure to read all about emergency funds here.

My Savings Account Mistake:

As a brief aside, perhaps you wish to keep your emergency fund or short-term savings in a rewards checking account because the interest rate is higher.  Not a bad idea.

But a word of caution: we did this for a few years and kept a running tally of our emergency fund in an excel spreadsheet.  On several occasions we noted with chagrin that our emergency fund on paper had a higher balance than our actual checking account.

Oops.  If you choose to keep your savings in your checking account because of a better return, be extra vigilant that your savings does not get spent away in monthly expenses.

3) Taking a Sucky Interest Rate Because of Laziness

Listen, banks aren’t all bad.  But one way they prey on our laziness is by offering crummy savings accounts as an add-on to your checking account.  If they already have your money in the form of your checking account, they (rightly) assume that you’ll bite at the opportunity to have a savings account in the same place.  Sounds convenient and it is.

But there’s a catch.  The interest rate you’ll likely receive will be obscenely low.  Its like when you were a kid and your brother offered you a dime to clean his room.  You were so eager at the prospect of money in any form that you didn’t stop and think about the fact that your brother was breaking child labor laws in 73 countries.

OK, that’s a bit of a tangent, but the idea is that you should shop around for better rates rather than take the first one you see.  Overcome your inherent laziness.  How bad can savings rates get at your local bank, you ask?  To use ours as an example, the savings account offered with our checking currently has a 0.25% interest rate.  That’s a quarter for every $100.

An abomination. Disgusting.

You can find a better rate.  Use this free tool.

4) Not Making Frequent Contributions to Your Savings

In my last post, about checking account mistakes, I told you about the importance of free EFT and Bill Pay.  Once you’ve signed up for it, make sure to schedule monthly transfers from your checking to savings account.

Hopefully you’ve set up direct deposit as well, so that your paycheck is electronically credited to you checking account.  After that, set up a scheduled transfer to your savings account.  Ideally, this transfer would take place a day or two after your paycheck hits the checking account so that you save before spending.

This is automated savings.  This is paying yourself first.

Notice how I’m not answering the question, “How much should I save?” There is no one answer. You know what you are saving for. After a 3-6 month emergency fund, make monthly contributions for large upcoming expenses: wedding, car, down payment.

5) No Online Access to Your Account

Do you like listening to a sales pitch for a HELOC every time you want to check your savings account balance? Me neither. Give me what I’m looking  for without trying to sell me something. Unfortunately, when you walk into the bank branch, often this is just what happens.

Online banking offers the escape from salesmen-masquerading-as-bank-tellers. Sign up with a bank that offers online access to check your balances, transfer funds, and schedule EFTs.

Make the Switch

We all make mistakes with our financial accounts;  even guys who write about personal finance.  Heck, I just told you one of mine in this post.

Let your savings account mistakes be a thing of the past.  Let go of your lame account.  Use my tools and find an awesome savings account.

Welcome to Money Mistakes Week at Bite Size Idea!

This week we will examine the three most important financial accounts everyone needs to own.  We’ll talk about mistakes you may be making with your checking, savings and investment accounts.  We’ll look at ways to squeeze the most money out of each and put you in the best financial position possible.

Today we are looking at checking accounts.  There are TONS of sneaky and not-so-sneaky ways that banks try to stick it to you when it comes to checking accounts.  Fees, courtesy charges, surcharges, or whatever fancy name the bank puts on them, they all boil down to ways the bank takes money from your account and puts it in theirs.

Here are some of the most common mistakes you may be making with your checking account:

1) No ATM Fee Refunds

Does your bank refund you fees when you use a competitor’s ATM?  Did you even know that was possible? Most of the big guys won’t do it, they say:

Use our ATMs only. If you don’t, we cannot be responsible for the fees you incur. Take that sucka, thanks for banking with us!

No, that’s not a direct quote from a bank executive. Yes, I made it up.  But come on people, I’m trying to make a point here!  My bank, like most others, will refund my ATM fees up to $25 every month.

If your bank is not refunding you for ATM fees, do yourself a favor, dump them and use my tools to find a new one.

2) No Direct Deposit

Are you one of those people who, every payday, waits impatiently for the paychecks to be handed out, clocks out at exactly 5:00 pm, then rushes to the bank in hopes of depositing your money before they close for the weekend?

I’m not laughing at you, really I promise I’m not…I just feel bad that you are stuck in the 90s.  Nowadays, you can set up direct deposit with your employer.  This means that your paycheck is quickly and electronically deposited into your account.

No paper checks. No rushing to the bank before closing time.

Now, in order for this to work, two things need to be in place: your employer needs to offer direct deposit (ask your HR rep) and your bank needs to accept direct deposit (call them or check their website).

If your bank does not accept direct deposit, do yourself a favor, dump them and use my tools to find a new one.

3) No Free ACH/EFT/Bill Pay

ACH (Automated Clearing House), EFT (Electronic Funds Transfer) and Bill Pay are all names for pretty much the same thing: the ability to transfer money electronically from one bank account to another.  Direct Deposit is a form of EFT.

Do you have recurring payments, such as mortgage, rent, utilities, etc?  Are you still writing checks every month and mailing them in?

Hehe. OK, maybe I’m laughing a little bit now. EFT (or “Bill Pay” as my bank calls it) is an awesome way to automate your regular payments.  Every bank is different, but mine has a slick web interface for setting up bill pay.  My bank also offers free bill pay as long as I have at least one monthly recurring payment (rent).

If your bank does not offer free EFTs, do yourself a favor, dump them and use my tools to find a new one.

4) No Online Banking

The internet offers wonderful ways to access information without talking to annoying people.  Annoying people like bank tellers and automated phone messages that try to sell me a new service every time I ask for my account balance.

No, I don’t hate bank tellers, they are people after all just looking to get by.  But if I can avoid their salesman tactics when getting information about my checking account, I’m all for it.  Online banking offers that escape.

With online banking, in theory, you can do just about everything you could in a physical branch. Get your account balance.  Review transactions.  Some even offer to deposit checks by taking a picture, scanning and uploading it.

If your bank has a crappy website, do yourself a favor, dump them and use my tools to find a new one.

5) Fees Up the Wazoo

I have no idea what a wazoo is, but if you have fees up there, it hurts.  They go by all sorts of names: fee, service charge, surcharge, take-this-sucka charge. Banks find every opportunity to tack them onto your checking account.

Monthly service fees are the most prevalent and offensive.  I just don’t understand them! The bank says:

I will take your money, use it to make more money (by offering high-interest loans to other customers), and also charge you to let me take your money. Take that sucka, thanks for banking with us!

(Once again, not a directly attributable quote.)  The point is, the bank should be thanking you for loaning them your hard-earned money!  Instead of charging you fees, they should be paying you to bank with them!

Enter the high-yield (or “rewards”) checking account.  If your bank is not offering you a return on your checking account, do yourself a favor, dump them and use my tools to find one that does.

Let Your Mistakes Be a Thing of the Past

Please, please, do not be reluctant to dump your bank in favor of a better one.  You are not married to your bank. So many people open a checking account in their teens and just live with it for the rest of their lives.

To them I say:

Lazy, scared bums! Get off your rear, do a little research, and save yourself money and time by switching to a better checking account!

And that, my friends, is a direct quote.

The cap has been thrown, the handshake from the Dean received, and the diploma’s in the mail (at least, that’s what they tell me). Now that my formal education has come to an end, where do I go from here?

How can one keep expanding his/her mind without the lectures of professors and hours of homework?

Enter TED. TED (which stands for Technology, Entertainment, Design) is a non-profit foundation that hosts talks from smart people offering “ideas worth spreading”.  This week I’ve been watching lots of talks, hoping to experience the enlightening effects of an expanding mind.

Here are some of my favorites.  Just a warning, this is a PG-13 rated post, as some of the videos have mild language. Enjoy!

Tony Robbins On Why We Do What We Do

Tony explains the hidden forces that cause us to make decisions, become motivated, and achieve.

Barry Schwartz On the Paradox of Choice

Perhaps my favorite TED talk so far.  Barry breaks down choice paralysis and challenges underlying assumptions of freedom.

James Randi’s Fiery Takedown of Psychic Fraud

This guy is funny, from his beard to his mannerisms. James hates all things metaphysical and non-scientific.  At least watch the video to see him down a bottle of sleeping pills!

Michael Shermer On Strange Beliefs

Michael demonstrates a marijuana dowsing-rod and how to fake a UFO picture.

Derek Sivers: How to Start a Movement

Derek explains that, when starting a movement, the first follower is much more important than the leader.

Arthur Benjamin Does “Mathemagic”

Behold the power of the human calculator. Art demonstrates the usefulness of mnemonics.

What are some of your favorite TED talks?

As you can read in my welcome message to the right, I recently graduated debt-free from college.  It’s one of the claims I use as evidence that you should give some weight to my money advice.

I’ve received a few requests asking how I did it.  Was there a magic bullet? A secret that the debt-ridden masses don’t know about?

Well, no, not really.

Wish I could say that I have a secret, the secret to graduating without student loans.  For me (and my wife), there was no one method that helped us graduate in the black.  It was a combination of many factors.

I’ll tell you exactly what we did and the awesome thing is that you can do it too.  This post is not me bragging about how great I am.  In fact, after reading, all of the magic will be gone and you’ll think, “That’s all he did!?”

Every step we took can be used by any of my readers.  Without further ado, here they are, the steps we took to graduate without any debt:

1)  Attend an Affordable School

Thanks to my religious affiliation, I was able to attend an awesome private school (Brigham Young University) for a great price.  Tuition was less than $3,000 per semester.

Now, I understand that you may not be able or even want to attend the school I did.  That’s not my point.

My point is that in order to graduate debt-free, attend an affordable school.  Many public universities offer awesome educations for cheaper prices.

Your college education is so much more than just name-dropping on your resume.

2) Apply for Financial Aid

Let go of your pride and apply for FAFSA.  It never hurts to apply; maybe your family makes too much, but maybe they don’t! My wife and I received lots of financial aid in the form of Pell Grants.

3) Get Married!

I married my wife because I love her and knew I wanted to spend the rest of my life with her.  The financial benefits of marriage had nothing to do with our short 3-month engagement…well, maybe just a little…

But seriously, getting married helps with college expenses a lot.  Once married, we combined two incomes and our expenses, instead of doubling, increased about 1.5 times.  Why so?  We shared many resources: housing, utilities, food, and internet.  So, cash inflow increased about 100% and cash outflow increased about 50%.

Also, by getting married, we were no longer our parents’ dependents. This meant that, when applying for FAFSA, our meager income was considered, rather than our parents’.

Let’s recap: getting married will help you graduate without student loans.  First, by sharing resources, you’ll save money.  Second, you will no longer be considered dependents of your parents and will thus be granted more federal financial aid.

Just remember to get married for love and not merely the financial benefits.

4) Pick the Right Major

I’ll admit, I stumbled into this one through no special insight of my own.  It turns out that by choosing a major in a technology-related field, the government gives you extra money for school!

By studying Information Systems, I was given a SMART Grant, which paid for thousands during my last two years.  This is the only major-related government grant that I know of specifically, but surely there are others.

Talk to your counselor to see what grants or scholarships are offered specifically to your major.

5) Live Frugally

This one’s a no-brainer.  It is especially easy to live frugally as a college student—everyone expects you to be poor!  As I explained in another post, my wife and I lived in a 300 square foot treehouse while in college.  The savings on rent allowed us to pay cash for school and take a few vacations.

Living close to a university offers tons of opportunities for cheap and free entertainment.  We enjoyed attending the campus Museum of Art and surveying the works of fellow students and professionals.

Every week the College of Humanities screened foreign films for free.  (French films are depressing, Russian ones confusing.)  I could go on and on, but I’ll leave it at this: if you live close to a university, I guarantee there are interesting, free events going on every week.

6) Work Your Butt Off

My wife and I worked a lot during school.  Being employed by the university, I was prohibited from working over 20 hours a week.  So, I worked the maximum on campus and then worked on the side.

I took the knowledge I learned working at school (web design) and turned it into freelance opportunities.  There were two benefits from working so much while attending school full-time: we graduated without any debt (and with money in the bank) and I had lots of work experience to put on my resume.

With Our Powers Combined…

Putting all these factors together, we were able to finish school without student loans.  As I said at the beginning, anyone can do what we’ve done.  Put in the effort, look for ways to make money and cut expenses.

I guarantee all of your hard work will be worth it when you walk across the stage and accept your diploma without the shackles of student loans.